TECHNICAL ANALYSIS – Dollar Gains as S&P 500 Marks Trend Reversal

THE TAKEAWAY: The US Dollar accelerated higher as the S&P 500 broke critical support, hinting the rising trend established from June has been overturned.

S&P 500 – Prices pushed lower as expected after putting in a bearish Dark Cloud Cover candlestick pattern below resistance at 1466.10. Sellers have now cleared trend-defining support in the 1424.90-1425.10 area, marked by the March 27 high and the 23.6% Fibonacci retracement. The move overturns the rally from the June 4 low, hinting a prolonged period of weakness is ahead. The first downside objective from here is at 1394.30, the 38.2% Fib. The 1424.90-1425.10 region is now acting as resistance, with a reversal back above that targeting 1436.30.

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL – Prices broke support at 87.66, the 38.2% Fibonacci expansion, with sellers now aiming to challenge the 50% level at 83.76. The 87.66 mark has been recast as near-term resistance. A reversal back above that aims to challenge the 90.00 figure and a falling trend line set from late September, now at 91.92.

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD – Prices continue inch lower as expected following the formation of a bearish Dark Cloud Cover candlestick patter. Sellers have taken out support in the 1732.33-35.65 area, marked by a horizontal pivot level and the 23.6% Fibonacci retracement, exposing the 38.2% level at 1693.06. Alternatively, a break above 1735.65 targets 1778.67.

Daily Chart - Created Using FXCM Marketscope 2.0

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US DOLLAR – Prices continue to push higher as expected after putting in a bullish Piercing Line candlestick pattern above support at a rising trend line set from mid-September. Buyers have now pushed through trend-defining resistance at the top of a falling channel set from the June 1 high. The move overturns a major down trend and hints a period of prolonged strength may be ahead. Initial resistance is at 9963, the 38.2% Fibonacci retracement, with a break above that exposing the 50% level at 10032. Channel resistance-turned-support is now at 9909. A push below that targets 9849.

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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